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NCERT SHORT NOTES

ECONOMICS - IX

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Chapter 01 – The Story of Village Palampur

Village Palampur: Palampur is a small village having about 450 families. It is 3 km

away from Raiganj — a big village. Shahpur is the nearest town to the village.

Main Production Activities: Farming is the main production activity in the village

Palampur. Most of the people are dependent on farming for their livelihood. Non-

farming activities such as dairy, small-scale manufacturing (e.g. activities of weavers

and potters, etc.), transport, etc., are carried out on a limited scale.

Factors of Production (Or Requirements for Production of Goods and Services):

Land, labour and capital are the basic requirements for production of goods and

services which are popularly known as factors of production. Land includes all free

gifts of nature, e.g., soil, water, forests, minerals, etc. Labour means human effort

which of course includes physical as well as mental labour. Physical capital is the

third requirement for production. Physical capital includes fixed capital (e.g. tools,

machines, building, etc.) and raw materials such as seeds for the farmer, yarn for the

weaver.

Important Changes in Farm Activities: Land area under cultivation is virtually

fixed. However, some wastelands in India had been converted into cultivable land

after 1960.

Over the years, there have been important changes in the way of farming, which have

allowed the farmers to produce more crops from the same amount of land.

These changes include:

(a) Multiple cropping farming

(b) Use of modern farming methods.

Due to these changes (in the late 1960s) productivity of land has increased

substantially which is known as Green Revolution. Farmers of Punjab,

Haryana and western Uttar Pradesh were the first to try out the modern

farming methods in India.

Labour: After land, labour is the next basic factor of production. Small farmers

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provide their own labour, whereas medium and large farmers make use of hired

labour to work on their fields.

Capital: After land and labour, capital is another basic factor of production. All

categories of farmers (e.g. small, medium and large) require capital. Small farmers

borrow from large farmers or the village moneylenders or the traders who supply

them various inputs for cultivation.

Modern farming requires a great deal of capital.

Sale of Surplus Farm Products: Farmers produce crops on their lands by using the

three factors of production, viz. land, labour and capital. They retain a part of produce

for self- consumption and sell the surplus in the nearby market. That part of farm

produce which is sold in the market is called marketable surplus. Small farmers have

little surplus output. It is the medium and large farmers only who have substantial

surplus produce for selling in the market.

Non-farm activities: Out of every 100 workers in the rural areas in India, only 24

are engaged in non-farm activities. There is a variety of non-farm activities in the

villages. Dairy, small scale manufacturing, transport, etc., fall under this category.

Chapter 02 – People as Resource

Human beings perform many activities which can be grouped into economic and

non- economic.

Economic Activities: Economic activities refer to those activities of man which are

undertaken for a monetary gain or to satisfy his/her wants. The activities of

workers, farmers, shopkeepers, manufacturers, doctors, lawyers, taxi drivers,

etc. fall under this category.

Non-Economic Activities: Non-economic activities are ones that are not

undertaken for any monetary gain. These are also called unpaid activities,

e.g., Puja-paath, housekeeping, helping the poor or disabled, etc.

Classification of Economic Activities. Various economic activities can be classified

into three main sectors, that is primary sector, secondary sector and tertiary sector.

The primary sector includes activities like agriculture, forestry, animal husbandry,

fishing, poultry, farming and mining. In this sector, goods are produced by exploiting

nature. In the secondary sector, manufacturing (small and large) and construction







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activities are included. The tertiary sector (also called service sector) provides

various types of services like transport, education, banking, insurance, health,

tourism, etc.

Market Activities and Non-Market Activities. Economic activities, i.e. production

of goods and services can be classified into market activities and non-market

activities. Market activities are performed for remuneration. Non-market activities

are the activities carried out for self-consumption.

Activities of Women. Women generally look after domestic affairs like cooking

of food, washing of clothes, cleaning of utensils, housekeeping and looking

after children.

Human Capital: Human capital is the stock of skill and productive knowledge

embodied in human beings. Population (human beings) become human capital

when it is provided with better education, training and health care facilities.

People as a Resource: People as resource is a way of referring to a country’s

workforce in terms of their existing skills and abilities.

Human Capital Formation: When the existing human resource is further

developed by spending on making the workforce more educated and healthy, it

is called human capital formation.

Quality of Population: The quality of population depends upon the literacy rate,

life expectancy and skills formation acquired by the people of the country.

Role of Education: Education is the most important component of human

resource development.

In view of its contribution towards the growth of the society, government

expenditure on education as a percentage of GDP rose from 0.64% in 1951-52 to

3.98% in 2002-03. However, our national goal is 6% of GDP.

Health: Health is another very important component of human resource

development. Efficiency of workers largely depends on their health.

There has been considerable improvement in the country’s health standard. For

instance, the life expectancy at the time of birth in India rose from 37.2 years in

1951 to 63.9 years in 2001. Similarly, infant mortality rate has come down from

147 to 70 during the same time period.

Unemployment: Unemployment is said to exist when people who are willing to

work at the prevailing wage rates cannot find jobs. When we talk of unemployed

people, we refer to those in the age group of 15-59 years. Children below 15

years of age and the old people above 60 are not considered while counting the

number of unemployed.

Nature of Unemployment in India: Seasonal unemployment occurs when







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people fail to get work during some months of the year (that is, during off-

season). Farm laborers usually face this kind of problem. Disguised

unemployment is another kind of unemployment found in rural areas. Such kind

of problem arises due to excessive pressure of population on agriculture.

Disguised unemployment refers to a situation wherein the number of workers in

a job is more than actually required to do the job. The extra number of workers

are disguisedly unemployed.

Consequences of Unemployment:

(i) Unemployment leads to wastage of manpower resource.

(ii) Unemployment tends to increase the economic overload that is

dependence of the unemployed on the working population.

(iii) Unemployment may lead to increase in social unrest and tension.

Chapter 03 – Poverty as a Challenge

In our daily life we come across many poor people such as landless labourers in villages, people

living in jhuggis, daily wage workers at construction sites, child labourers in dhabas,

rickshaw- pullers, domestic servants, cobblers, beggars, etc.

Poverty: Usually the levels of income and consumption are used to define poverty.

In India, poverty has been defined as a situation in which a person fails to earn

income sufficient to buy him bare means of subsistence.

Other Indicators of Poverty: Now poverty is looked through other indicators like

illiteracy level, lack of access to health care, lack of job opportunities, lack of access

to safe drinking water, sanitation, etc. Nowadays, the concept of social exclusion is

becoming very common in the analysis of poverty.

Estimates of Poverty: The incidence of poverty in India was around 55 per cent in

1973 which declined to 36 per cent in 1993 and further to 26 per cent in 2000.

Social groups which are most vulnerable to poverty are Scheduled Caste and

Scheduled Tribe households.

Inequality of Incomes within a Family: In poor families, old people, women and

female children are denied equal access to family’s available resources. They are the

poorest of the poor.

Inter-State Disparities: The proportion of poor people is not the same in every

state. In 20 states and union territories the poverty ratio is less than the national

average. Orissa and Bihar are the poorest states of India with poverty ratios of 47 per

cent and 43 per cent respectively. Lowest incidence of poverty is found in Jammu

and Kashmir with poverty ratio of just 3.5 per cent.

Global Poverty Scenario: There has been substantial decline in global poverty.







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However, it is marked with great regional differences. Poverty has declined more in

China and South-East Asian countries.

Causes of Poverty: There are a number of causes for the widespread poverty in

India. These are:

(i) Rapid growth of population, particularly among the poor is considered a major

cause of Indian poverty.

(ii) Our agricultural sector has failed to generate much employment opportunities

for the farm labourers. Similarly, our industries could not provide much job for

the job seekers.

(iii) One of the major causes of poverty is the unequal distribution of land and

other resources. Various land reform measures introduced after Independence

could not improve the life of millions of rural poor because of their poor

implementation.

Social factors: People in India, including the very poor, spend a lot of money on social

occasions like marriages, festivals, etc. Poor people hardly have any savings;

they are, thus forced to borrow. Unable to pay because of poverty, they became

victims of indebtedness. Joint family system has prevented people from doing

hard work.

Steps taken by the Government for Poverty Alleviation: Our government’s

strategy to poverty reduction has been twofold. One, promotion of economic growth

and, two, targeted poverty alleviation programmes.

Poverty Alleviation Programmes: To address the poor, a need for targeted

anti-poverty programmes was strongly felt.

Some of them are given below:

Prime Minister Rojgar Yojana (PMRY): The aim of this programme (which

was started in 1993) was to create self-employment opportunities for

educated unemployed youth in rural areas and small towns.

Rural Employment Generation Programme (REGP): REGP was launched in

1995 to create self-employment opportunities in rural areas.

Swarna Jayanti Gram Swarojgar Yojana (SGSY): SGSY was started in 1999.

The programme aims at bringing the assisted poor families above the poverty

line.

Pradhan Mantri Gramodaya Yojana (PMGY) was launched in 2000.

Antyodaya Anna Yojana (AAY) for ‘the poorest of poors’ and elders.

National Food for Work Programme (NFWP) was launched in 2004.

National Rural Employment Guarantee Act (NREGA) was passed in

September 2005. The Act provides 100-days assured employment every year

to every rural household in 200 districts.

The Challenges Ahead: Though poverty has declined in India, poverty reduction







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remains India’s most compelling challenge. We will have to do something special to

fight against wide regional disparities. We must broaden the definition of poverty

from ‘a minimum subsistence level of living to a reasonable level of living’. Bigger

challenges before us are: providing health care, education and job security for all the

achieving gender equality.

Chapter 04 – Food Security in India

Food security means availability, accessibility and affordability of food to all people at all times.

FOOD SECURITY: The poorest section of the society remains food insecure all the

times. People above poverty line might also feel food insecure in times of natural

calamity like earthquake, drought, flood, tsunami, etc.

FOOD-INSECURE: In rural areas, the worst affected people are: landless and small

farmers, traditional artisans (weavers, potters, blacksmith etc.) providers of

services (e.g. barbers, washermen etc), petty self-employed workers and

destitute. In the urban areas, persons employed in ill-paid occupations and

casual labourers are food insecure.

Large proportion of pregnant and nursing mothers and children under the age of 5

years constitute an important segment of the food insecure population.

Hunger: Hunger has chronic and seasonal dimensions. Poor people suffer from

chronic hunger and are food insecure all the times. Seasonal hunger is caused by the

seasonal nature of agricultural activities in rural areas. In urban areas, seasonal

hunger occurs because of the casual type of work. Thus, seasonal hunger exists

when people are unable to get work for the whole year.

Need for self-sufficiency in food grains. Our government since Independence

realised the need to attain self-sufficiency in food grains because India

experienced acute shortage of food grains after partition of the country in 1947.

The need for self-sufficiency arises from the following:

(a) to feed rising population

(b) to fight against droughts, floods, cyclone, etc.

(c) to reduce import of food grains

(d) to control prices of food grains.

Food Security System in India: Since the advent of the Green Revolution in the

1960s the country has avoided famine, even during adverse weather conditions.

India has become self- sufficient in food grains during the last 30 years because of

the variety of crops grown all over the country. Also, we have developed a food

security system.







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Buffer Stock: Buffer stock is the stock of food grains (wheat and rice) procured by

the government through the Food Corporation of India (FCI). The FCI purchases

wheat and rice for the government from the farmers of surplus states at pre-

announced prices. This price is called ‘minimum support price’.

Public Distribution System (PDS): PDS refers to a system through which the food

procured by the FCI is distributed among the poor through government regulated

ration shops. The consumers are issued ration cards.

Kinds of Ration Cards. There are three kinds of ration cards:

(a) Antyodaya cards for the poorest of the poor,

(b) BPL cards for those below poverty line and,

(c) APL cards for those above poverty line.

Three Important Food Intervention Programmes:

In the wake of high incidence of poverty levels in mid-1970s, three important

food intervention programmes were introduced:

(a) Public Distribution System (in existence earlier)

(b) Integrated Child Development Services (ICDS) in 1975

(c) Food for work in 1977-78.

In 2000, two special schemes were launched viz. Antyodaya Anna Yojana (AAY) and

the Annapurna scheme (APS) with special target groups of the poorest of

the poor and indigent senior citizens, respectively.

Excessive Food Stocks: In July 2002, the stock of wheat and rice with FCI was 63

million tonnes which was much more than the minimum buffer norms of 24.3

million tonnes. The stock reduced thereafter but always remained higher than the

buffer norms.

Paradox of Excess Stocks and Starvation: In fact, India has experienced a

paradoxical situation in recent years. While the granaries (godowns) of the

government are overflowing with excess stocks of food, we also find people without

food. The main reason for this unfortunate situation is that many poor families do not

have enough money or income to buy food.

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